Don (not his real name) was in a real pickle. He was a gentleman in his late 50s supporting a family of three, consisting of his stay at home wife and young niece. He was the sole income earner in the household, which was stressful enough, but he also was in trouble with the Canada Revenue Agency. You see, Don was a self-employed consultant in the construction industry. Although he earned very good money (almost $120,000 per year), he hadn’t put any money away in the last few years to pay his annual tax bill to the Taxman. As a result, he owed about $180,000 in personal income tax. Well,…

The Canada Revenue Agency (“CRA”) has significant powers under the Income Tax Act (“ITA”) to collect personal income tax debt. This post examines the collection procedures most commonly used. Charge over real property Under Section 223 of the ITA, the CRA can register a lien over a debtors home (or any other real estate owned by the debtor). It does so through the following steps: The Ministry of Revenue issues a certificate which certifies an amount owing by the tax debtor This certificate is registered with the Federal Court and when so registered, it has the same effect as if the certificate were a judgment obtained against the debtor for…

There is a lot of misconception of what creditors can and cannot do to collect their debts. To dispel some myths, this post will walk you through the steps a creditor will typically take in collecting its debt. Please note that the content of this post applies to residents of Ontario and its legislation. Step 1: Dealing with the Creditor If you have fallen behind in your payment to a creditor, it will usually send you a notice of your late payment by mail. If it receives no response, their collection department will start calling you by phone. Step 2: Dealing with a Collection Agency If no satisfactory payment arrangements…